Election 2006: PM Promises New Italian Cabinet with Staying Power

Centre-left Prime Minister Romano Prodi has been sworn in, along with a cabinet that he promises has been built to last the full electoral term. Newly-elected President Giorgio Napolitano yesterday approved Prodi’s 25-member team, which includes heavyweights from his nine-party Union coalition and, as expected, independent Tommaso Padoa-Schioppa.

It was always clear that the formation of this cabinet was going to be a tough task, and the line-up includes eight ministers without portfolio in an attempt to placate all the coalition parties.

In order to accommodate all the coalition members, Prodi has allocated a ministry to each of the parties, with only the Rose in the Fist alliance missing out on a position with a portfolio attached. This was a clear disappointment to the small alliance, which had fought over the Defence portfolio with the Catholic centrist UDEUR party. Prodi appeased neither in the end, handing the post to aide Arturo Parisi.

Parisi is one of several close allies of Prodi in the cabinet who may act as ‘buffers’ to dampen the possible personality clashes that might surface. Prodi has brought in heavyweight Giuliano Amato to the Interior Ministry; he is known for his measured attitude and success in helping Italy to qualify for Eurozone membership. Having been able to escape the corruption scandals that engulfed his former party, the Socialists, he has held several cabinet posts in the past, and sat on the convention that drew up the draft European constitution.

Taking charge of the Economy Ministry is former European Central Bank (ECB) member Tommaso Padoa-Schioppa. The minister was also appointed to the International Accounting Standards Board (IASB) in December 2005. This role required the management of powerful groups of trustees, and his experience in such a role means that the markets are pleased over his appointment to oversee the management of Italy's notorious public finances. He is respected for his track record as governor of the Bank of Italy under former president Carlo Azeglio Ciampi, his presidency of the Basel Committee on Banking Supervision and his leadership of the bourse watchdog committee Consob. Yet his task is a tough one; two ratings agencies have already threatened to downgrade Italy’s credit rating if work is not immediately carried out to rectify the state of the country’s public finances. Prodi promised before the elections that a full audit would be carried out to ascertain the true state of the economy ahead of a draft budget, which will need to be drawn up in the coming months. This could bring some difficult news, and a considerable breach of the 3%-of-GDP budget deficit ceiling mandated by Eurozone rules is likely. Growth, which was flat in 2005, could well pick up though if confidence in the new minister is strong. His performance will have to be supported by confidence-building measures from the rest of the Prodi government.

Prodi has given deputy premierships to DS leading member Massimo D'Alema and Margherita leader Franscesco Rutelli, in a move to ensure support from influential figures should the premier face a difficult time in office. D'Alema had been denied the parliamentary speaker's post and the presidency, and has instead been installed in the Foreign Ministry. Although there had been much speculation that this was the post he sought, it will mean that he cannot remain his normal outspoken self. The former prime minister is something of a threat to the Prodi leadership though, and it will be important to keep him happy. D'Alema would likely be ready to step into the breach should a crisis force the centre-left leader out.

Rutelli and D'Alema will be able to exert more pressure on Prodi if a project to merge the DS and Margherita is revived. Rutelli, former mayor of the capital, Rome, is popular for carrying out extensive public works and fostering good relations with the Vatican, which saw him chosen as the centre-left's candidate for prime minister in the 2001 elections, which were won by the outgoing centre-right government of Silvio Berlusconi. Rutelli’s appointment as culture and tourism minister revives the defunct tourism portfolio.

Outlook and Implications

Since Prodi does not have the backing of a particular party, there are ever-present dangers for the new government. The narrowness of the coalition’s majority in the Senate (upper chamber of parliament) - just two seats - means that voting discipline will be paramount if the government is to pass reforms. Prodi has said that the requirement that all coalition parties sign his 280-page reform agenda will mitigate against disaster; however, the behaviour already exhibited by some of the smaller parties during the elections for the speakers' and president's posts has shown their potential to hold the government to ransom. This makes the credibility issue even more important – if Prodi can get public support behind his reforms, they are less likely to be derailed by disgruntled coalition minnows. However, pressure from within the coalition is only one part of the problem. If it is to win over the public, the government will need to shout down the protestations of the centre-right, which argues that the 0.1-percentage-point margin of victory for the centre-left in the 9-10 April elections means that the government, and the left-elected new president, represents only half the country. Prodi has already won some critical backing from business to assist him. There is now very real pressure on him to begin legislating for reform.

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